German coalition compromise on gas and oil heating includes key exemptions

Germany’s ruling coalition on Friday evening reached a compromise on a controversial energy bill to ban the installation of new gas and oil-fired heating systems as of the start of next year, but the deal includes important exemptions and phase-in periods.

According to the agreement, every newly installed heating system will have to be powered by 65 percent renewable energy starting January 1, 2024.

The compromise contains a number of exemptions, introduces transition periods and includes dedicated financial support, Sueddeutsche Zeitung reported.

The law will “bring about a mandatory switch to renewable heating,” Germany’s economy and construction ministries said.

The coalition agreement on the details of the bill — which still needs to be submitted to the federal states for consultation and passed by the cabinet — comes after the government on Tuesday evening reached an agreement on its future climate policy following 30 hours of negotiations. Germany aims to be climate-neutral by 2045.

The agreement scraps an initial plan to mandate replacing old oil and gas heaters that break down after 2024 with modern heating systems. Instead, reinstalling an oil or gas boiler will be allowed in the short term, provided the heating system is supplemented with new technology to reach the 65 percent target within three years.

The 65 percent renewables requirement does not apply to homeowners who are older than 80. In those cases, it only comes into force once their house is inherited or sold, with a transitional period of two years.

“The law sets another sector on course for climate neutrality and we enable a pragmatic transition,” said Economy Minister Robert Habeck.

Christian Lindner, the country’s finance minister, said that “there will be ambitious climate protection” which “can be achieved through different technologies.” He added: “There will be no fixation on heat pumps; modern gas heating systems will still be allowed, for example.”

The bill does not prioritize one alternative to old gas and oil heating, such as heat pumps, over others.